Shares in major British car dealership Pendragon plunge after it warns that demand for new cars in the UK is sliding
- Latest: UK manufacturing growth slows, as bosses grow pessimistic
- BREAKING: Pendragon issues profits warning as consumer confidence wanes
- Business has deteriorated badly in the last quarter
- Company blames “decline in demand for new cars”
- Pretax profits could fall to £60m; City expected £75m
- Pendragon shares have hit a four-year low
Britain’s car industry is “in crisis” following Pendragon’s gloomy news today, says Simon English in the Evening Standard.
A hefty profit warning from Britain’s biggest car dealer sent shares crashing nearly 20% and raised fears about the state of one of the nation’s most important industries.
Pendragon alarmed the market and City analysts with a sudden admission that too many cars are being made and consumer confidence has stalled.
Shares in Britain’s biggest motor retailer went sharply into reverse after Pendragon finally admitted that it had been caught up in the decline in new car sales.
The company, which trades under its Stratstone and Evans Halshaw showrooms, reported that profits this year will come in at about £60 million, nearly a fifth lower than last year.
The group said it is experiencing “unprecedented pressure” in the premium sector “caused by certain manufacturers continuing to force vehicles into the market despite softening demand”.
CEO Trevor Finn set out steps that he hopes will “accelerate transformation”, including looking for a senior hire in the UK, considering a pullback from premium brands, and halting any new acquisitions in the US. It hints that it may pull out of the US altogether.
The City analysts who track Pendragon have been pulling some screeching handbrake turns since its profits warning came out.
Berenberg have lowered their recommendation for the stock to hold, from buy, and cut the price target from 46p to 26p.